Integrated Capital

Ecosystem

A Fellowship for Finance Professionals Creating Positive Change

Locavesting Staff | April 4, 2017

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RSF Social Finance has been a leader in sustainable funding, with more than $450 million in loans, grants and investments since 1984. Along the way, it has mastered the art of creative financing, marshaling the right mix of funding tools to meet the unconventional needs of social enterprises. With a new Integrated Capital Fellowship, RSF is looking to spread the model it has honed over 30 years and cultivate a new generation of creative finance practitioners.

Fellows will learn to apply RSF’s integrated capital approach, including the coordinated use of diverse financing tools (including loans, loan guarantees, investments, and grants), network connections and advisory services to support enterprises that are solving complex social and environmental problems. The nine-month program kicks off in October and includes in-person training intensives, one-on-one sessions with expert advisors, peer coaching, case studies, webinars and independent study. Tuition is based on a sliding scale, from $10,000 to $25,000. RSF is accepting applications through April 15, 2017.

We spoke with Deb Nelson, RSF vice president, client and community engagement, about the new fellowship program.

What is integrated capital?

Integrated capital includes financial capital, such as loans, loan guarantees, investments and grants, and non-financial capital, such as mentors, consultants, and access to networks.

The point is to get critical support to enterprises that are in the forefront of solving our most complex social and environmental problems. These enterprises typically don’t have the steep growth curves and other characteristics venture capitalists are looking for, and in general conventional finance approaches don’t serve them well. We have a different perspective. The enterprises we work with can be for-profit or non-profit, but they have to be mission-driven, and they have to be able to demonstrate the positive impact they’re having on individuals, communities and the planet.

Integrated capital meets these enterprises where they are, so game-changing social entrepreneurs can get the right kinds of capital at the right time.

Can you provide an example?

One integrated capital example is the loan, loan guarantee and grant we provided to Veritable Vegetable,  a women-owned organic produce distributor that purchases, transports and supplies the highest quality organic fruits and vegetables on the market. They’re the oldest distributor of organic food in the U.S., and they’re exceptional in their commitment to make every business decision based on their values.

They came to RSF when they needed more space to meet growing demand for their services. Given the real estate market in San Francisco, purchasing a new building was not an option. They were committed to staying in the community, though, and they found a warehouse rental—but it needed $4 million in renovations. That presented a difficult financing problem, because Veritable Vegetable had no collateral, and in order to secure a $3.2 million loan, they had to come up with $800,000. They reinvest all their revenues back into the company, so they didn’t have that much cash on hand.

Is the purpose of wealth to multiply itself? Or is it to fulfill needs, solve problems, and make good things happen?

As my colleague Kate Danaher, who led this relationship, says, we basically came up with a down payment for them. RSF first provided a 30 percent match to a $100,000 U.S. Department of Agriculture grant that Veritable Vegetable received as a food hub, and a $270,000 loan from our Local Food Collaborative. We then reached out to our strong network of funders to bring in $400,000 in subordinated unsecured loans, and pulled together the total down payment. RSF then made a $1.6 million term loan to the company, and we worked with our partner New Resource Bank to do the same.

Where did the idea for the fellowship come from? What need are you addressing?

We created RSF’s Integrated Capital Fellowship to address a growing need for practitioners who understand how to leverage the power of capital to create positive change. Many investors, donors and wealth holders are seeking new ways to engage with their money, and are looking to use wealth to solve pressing social and environmental problems. They want to work with people who have strong financial and interpersonal skills, and who understand integrated capital, wealth psychology and whole portfolio activation.

We’ve had demand on both sides for this—we hear from investment advisors and foundation people who want to use the integrated capital approach, and we hear from investors who are frustrated that their advisors don’t understand their values-based investment goals and how to make them happen.

We plan to educate and connect thousands of integrated capital practitioners through this program and our other field-building efforts. It all serves our long-term goal of facilitating the flow of money to where it’s needed most, and of fundamentally changing the way people think about money.

What type of person is the ideal candidate for the fellowship?

This fellowship is the first of its kind, and we are looking to attract financial activists and build from that core. The fellowship is ideal for people who have experience in finance, a deep desire to drive positive change, a commitment to learn and grow (both personally and professionally), and the ability to influence the flow of capital.

We expect to attract professionals who work with family foundations, family offices, high-net-worth individuals and community foundations.

Describe the current financial paradigm and how it’s changing.

More and more people are realizing that the current financial paradigm isn’t working. Our economic system focuses on short-term financial profit, often at the expense of people and the planet. We believe in creating long-term benefit for all, and that means social, environmental and economic benefit.

We also believe we need to question our assumptions about the purpose of wealth. Is the purpose of wealth to multiply itself? Or is it to fulfill needs, solve problems, and make good things happen? We believe it’s the latter, and more and more people, including wealth holders, feel the same way. We see this especially in the millennial generation and among women, whether they’ve inherited money or been involved in highly successful business ventures—but it’s really a rising tide across the board.

What impact do you hope this fellowship will have?

Our Integrated Capital Fellowship will educate, connect and inspire financial activists who can speed the transition from an extractive economy to a regenerative economy. We can’t do this alone—we’re part of a growing community of investors, business leaders, community organizers, activists and citizens that can make it happen. This new program will prepare a core of financial activists who can open people’s eyes to the potential for deploying capital in ways that will have lasting, positive impact—and then help them do it.

Because our fellows will move capital using an integrated and strategic approach, it’s more likely that the money they manage will be used to solve our most pressing social and environmental problems—and not to perpetuate a system that only benefits a very small group of people.

Related: Blended Capital helps Small Scale Farmers in Arkansas

A Social Lender Pursues a Radical Experiment in Financial Transparency and Participation

You’re an Investor in Food, Whether You Know it or Not

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